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Maximizing Brand Equity

Brand Equity can be defined as the commercial value that derives from consumer perception of the brand name of a particular product or service, in other words, the value premium that a company generates from a product with a recognizable name when compared to a generic equivalent. Think Apple’s new iPhone X price starting at $1000 compared to a generic smartphone.

The good news is that you can create brand equity for your products and services by making them memorable, easily recognizable, and superior in quality and reliability.

Brand equity has three essential components:

  1. Consumer perception

  2. Negative or positive effects

  3. Resulting value

First and foremost, brand equity is built by consumer perception, which includes both knowledge and experience with a brand and its products. The knowledge that a customer segment holds about a brand directly results in either positive or adverse effect. If the brand equity is positive, the organization, its products, and its financials can benefit. If the brand equity is negative, the opposite is true.

These effects can turn into either tangible or intangible value.

If the effect is positive, the actual value is realized as increases in revenue or profits and intangible value is achieved as marketing awareness or goodwill. If the effects are negative, the tangible or intangible value is also negative.

For example, if consumers are willing to pay more for a generic product than for a branded one, the name is said to have negative brand equity.

Cult Brands like Disney, Apple, and Harley Davidson, have high brand equity. Brand equity accounts for the difference in customer response that a brand name makes.

In essence, brand equity is a factor of a brand’s ability to keep and attract customers.

Mini Workshop: Maximize Brand Value

  • Who are your most profitable customers?

  • What drives your best customers to buy from you?

  • What emerging consumer needs can you address?

  • How can you differentiate your brand?

Brands with high perceived value command premium pricing, better margins, and wider distribution. By knowing your best customers and what drives them to choose you more often you can maximize your brand equity.

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